WTI hits 2019 high as oil extends first-quarter gains on tight supply

LONDON (Reuters) – U.S. crude oil hit a 2019 high on Monday and Brent gained a dollar after tight supply and positive signs for the global economy drove both benchmarks’ largest first-quarter gains in nearly a decade.

FILE PHOTO: A view of Equinor’s oil platform in Johan Sverdrup oilfield in the North Sea, Norway August 22, 2018. REUTERS/Nerijus Adomaitis/File Photo

U.S. West Texas Intermediate (WTI) futures were up 68 cents, or 1.13 percent, at $60.82 by 1125 GMT, after briefly reaching their highest in more than four months at $60.90. WTI gained 32 percent in the first quarter.

Brent crude for June delivery was up $1.03, or 1.52 percent, at $68.54, having risen 27 percent in the January-March period.

Positive Chinese factory gauges and signs of progress in Sino-U.S. trade talks have boosted sentiment, helping to buoy regional stock markets.

“Better-than-expected Chinese manufacturing data has helped markets begin the first day of the new quarter on a bullish note, with major stock indices across Asia surging,” said Mihir Kapadia, chief executive of Sun Global Investments.

“Chinese manufacturing output is quite reflective of global demand, and any increase indicates a flurry of economic activity across major economies.”

The United States and China said they made progress in trade talks that concluded on Friday in Beijing, with Washington saying the negotiations were “candid and constructive” as the world’s two largest economies try to resolve their trade war.

Analysts have turned cautiously optimistic on the oil market, a monthly Reuters poll showed on Friday, lifting their forecast for the average Brent price in 2019 for the first time in five months to $67.12.

Hedge funds and other money managers raised their net long U.S. crude futures and options positions to 243,209 in the week to March 26, the U.S. Commodity Futures Trading Commission said.

On the supply front, booming American production has steadied, with the U.S. government reporting on Friday that domestic output in the world’s top crude producer edged lower in January to 11.9 million barrels per day.

U.S. energy companies last week reduced the number of oil rigs operating to the lowest level in nearly a year, cutting the most rigs during one quarter in three years, energy services firm Baker Hughes said.

Meanwhile, oil prices are being propped up by U.S. sanctions on Iran and Venezuela along with voluntary supply cuts by the Organization of the Petroleum Exporting Countries and other major producers.

Washington has instructed oil trading houses and refiners to further cut dealings with Venezuela or face sanctions themselves, sources told Reuters, and has urged Malaysia and Singapore to be vigilant for illicit Iranian crude in its waterways.

Additional reporting by Aaron Sheldrick in Tokyo; Editing by Dale Hudson

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